USDA financing offers borrowers many benefits including 100% financing. Before you jump in and sign a contract for any home, though, you have to find out if the home qualifies for 100% USDA financing. Not all homes qualify, just as not every borrower qualifies. The USDA program is a unique opportunity for specific borrowers purchasing or refinancing homes in specific areas.
Your Property’s Location
Every home with USDA financing resides in a rural area. The definition of rural that the USDA uses might differ from you might expect. It is not all country roads and farm fields for miles and miles. As long as it is outside of the city lines and meets the population requirements according to the latest census, the USDA considers it rural.
How do you know which properties qualify? It is easy, especially when you find a home you really like. Simply head to the USDA website and enter the address. The program immediately lets you know if a home is USDA eligible or not. If you do not have a specific property in mind, you can enter the state’s name and then click on specific areas to find out the area’s eligibility.
Personal Eligibility for the 100% USDA Financing
Before you locate a home within rural boundaries, however, you should determine if you are eligible for the program. This is different than qualifying for the loan. The USDA bases eligibility on your household income along with your family size. If your household income exceeds the USDA guidelines, you cannot use USDA financing.
Finding out if you are eligible for the program is simple. Start on the USDA website and enter your state and county. Next, you enter the number of people who live in your household as well as the number of children (under 18 as well as over 18 and a full-time student), the number of disabled family members, and the number of elderly family members over the age of 62. The last step is to enter your household income. You must disclose income for every family member, including those not on the loan with you. You must disclose basic income, bonuses, self-employment, dividend, and rental income. Basically, any money anyone brings in must be disclosed. Once you enter your income, the program lets you know if you are eligible for USDA financing.
Moving Forward With USDA Financing
Once you know you qualify for USDA financing and you found a home within the boundaries, you need to act fast. USDA loan processing can take a little longer than any other loan program. Not only does the lender have to underwrite and approve your loan, but so does the USDA. The lender must send a full package to the USDA with your financial records, their findings, and any other documents necessary to prove your ability to secure the loan. The USDA may take a few weeks to get through your loan depending on their workload. Once they provide a clear to close, you are then free to close on your USDA loan.
If you think you may qualify for 100% USDA financing, it is worth pursuing. Without the need for a down payment, you can save a significant amount of money when you close on the home. Whether you are a first-time homebuyer or a homebuyer starting over, this program helps you get into the home you want. Because the USDA is strict about the properties they approve, you can rest assured knowing you purchased a home that is safe and sanitary. The USDA loan also offers low rates and competitive closing costs, making it possible to secure financing for much less money than any other loan may cost.